Curbing Opportunism in Concurrent Sourcing: Which Governance Approaches are Most Effective?

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Concurrent sourcing has been established as a distinct governance form. While recent research focuses on the determinants that lead firms to making and buying the same input, little is known about the governance of concurrent sourcing. In this study we theoretically distinguish between the different features of singular vs. concurrent sourcing, namely knowledge and threat. In a second step we develop theory that demonstrates how these differences impact common governance approaches: output monitoring, behavior monitoring and solidarity. Using primary data from the German machinery industry, we find that output monitoring is strengthened by the additional knowledge available in concurrent sourcing, while it surprisingly increased opportunism under singular sourcing. Solidarity, in contrast, reduced supplier opportunism in both the singular and the concurrent setting, even though to different degrees. Finally, behavior monitoring seemed ineffective indifferent of sourcing context. We provide further theoretical reasoning to explain these contradictory effects.